Anthony Bolton: my best ever trades

The Fidelity star made fortunes for his clients. He shares some of his
smartest moves with Richard Evans

Sometimes it pays to take the indirect route. As Anthony Bolton looks forward to bowing out on a high – his Fidelity China Special Situations fund, which he will leave next year, has recovered all its earlier losses and more – he can afford to look back at a couple of the more unusual coups from his time at the helm of the fund's predecessor, Fidelity Special Situations.

In an interview with The Telegraph on a recent trip to China, he provided investors with some useful insights into how he spotted opportunities that others had missed. His ability to do this over a 28-year stint at the Special Situations fund turned some ordinary savers into millionaires. For example, £10,000 invested in 1979 had been turned into £1.47m by the time he stepped down in 2008.

So what were these examples of masterly stock picking? Many involved the latest technology. The fund that Mr Bolton, 63, currently runs has its fair share of cutting-edge Chinese internet stocks, such as Alibaba, the e-commerce business, and Tencent, which offers online gaming and instant messaging.

When mobile phones were first around, there were only two networks in Britain – Vodafone and Cellnet, in which British Telecom had a 60pc stake. The remainder belonged to Securicor, the security company.

Mr Bolton wanted exposure to Cellnet – but he didn't buy shares in BT. "Mobile was obviously where the growth was," he said. But BT had a big landline business, which he didn't want to put money into, whereas Cellnet accounted for a much larger proportion of Securicor. So he bought Securicor shares instead.

"I realised that at some stage BT would want full control and buy Securicor's stake," he said. He hung on until it launched a takeover bid in 1999. The value of Securicor's holding in Cellnet had grown from £4m to about £3bn.

Mr Bolton's other inspired mobile buy was Nokia, the Finnish company that went on to dominate the handset market for many years. At the time it consisted of an array of disparate businesses.

"I met Nokia's finance director, who was an impressive figure, and he told me that he was selling everything except the mobile phone arm," Mr Bolton said. "I bought the shares, which did very well, although I sold them too early."

Other investments that delivered handsome returns for Mr Bolton's clients included technology stocks bought at bargain prices after the dotcom crash. He stepped down from the fund in 2008 and took up a role mentoring his firm's younger fund managers before launching the China Special Situations fund in 2010.

Like many investors, Mr Bolton believes that the growth in consumer spending in China offers opportunities for stock pickers. He started to think about some of the sectors that could benefit and realised that China's growing middle classes were likely to increase their spending on optical products such as glasses and contact lenses, and that the country's ageing population would further boost demand.

So he set about finding a suitable manufacturer that sold in China – but he found it in Taiwan.

"Formosa Optical has a subsidiary that owns a contact lens business in China," he said. "The subsidiary is also listed, in China, but shares in the parent company offered a cheaper route to a holding. This is just the type of consumer business I look for."

He owns other companies with exposure to China but listed elsewhere. Two trade on the London market – Fortune Oil and Hutchison China MediTech – while 21Vianet, which houses customers' internet servers in special buildings called data centres, is listed in New York.

Mr Bolton's China fund may not have produced the spectacular returns of its forerunner, despite its recent surge. But in his fourth decade as a fund manager, Anthony Bolton is still prepared to take the long way round in the search for profits.